Big Oil Industry Miscalculations

 In his 2015 article "Big Oil's Broken Business Model", Michael Klare talks about the impending collapse on the Big Oil's production-maximizing business model. This model rests on three assumptions - demand for oil will continue to increase indefinitely, high oil prices will more than cover increasing prices of extraction and refining, and climate change concerns are of no consequence.

   It is true that demand for oil continues to increase but it does not do so at rates projected by Big Oil industry. Were these rates inflated on purpose? Consumption seems to be decreasing, and EIA (Energy Information Administration) reports that countries worldwide are experiencing slowdowns or even reductions of economic growth. As for climate change, it is becoming impossible to ignore the implications of pollution as extreme weather events hit closer and closer to home and the scientists are warning of the 6th extinction event to rival those that came before.   

   Since 2005 Big Oil has faced a critical problem - depletion of current stock. Many legacy fields have been running dry, and so a conscious decision was made to push exploration towards unconventional resources, or "tough oil", such as shale and ultradeep oil.This industry-wide effort was spearheaded by David O'Reilly of Chevron and fully supported by US government through a series of acts which allowed for land leases and exploration of federal lands for potential oil reserves. John Browne, former CEO of BP, was sounding alarm bells and advocating for renewables R&D but was quickly "eased out" and replaced with Tony Howard who, like O'Reilly, was ready to extract at all costs. This extraction frenzy eventually lead to Deepwater Horizon blow-out, one of the most devastating industry accidents to date, among many other lesser known or even unheard of environmental disasters involving fossil fuels. The Big Oil business model assumes that there will be constant ever-increasing demand for its product, and so all proven, probable and possible reserves were set to be explored without regard to high cost, difficulties in extraction and refining, and environmental implications . Big Oil continues to lobby the government and receive enormous subsidies at the expense of our well being and the well being of generations to come. However small, the silver lining does exist, even in this seemingly hopeless scenario. Big Oil is on its way out, and now it is the matter of being able to see the signs of the dying industry and to take action to "ease out" the Big Oil in favor of renewables.(https://mondediplo.com/openpage/big-oil-s-broken-business-model)